[Congressional Record Volume 148, Number 14 (Thursday, February 14, 2002)]
[Extensions of Remarks]
[Pages E151-E152]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       TESTIMONY OF BETTY R. MOSS

                                 ______
                                 

                        HON. WILLIAM D. DELAHUNT

                            of massachusetts

                    in the house of representatives

                      Wednesday, February 13, 2002

  Mr. DELAHUNT. Mr. Speaker, as we debate the merits of reforming our 
nation's pension system, I would like to share with my House colleagues 
the experience of Ms. Betty R. Moss, a recent retiree of the Polaroid 
Corporation. Her compelling testimony, prepared for delivery before the 
Senate Committee on Health, Education, Labor and Pensions, paints a 
vivid and disturbing portrait of the vulnerability of workers and 
retirees under our current pension and bankruptcy laws. I ask my 
colleagues to consider her poignant words, and join with me in enacting 
new protections to ensure retirement security for all workers and 
retirees.

   Testimony of Betty R. Moss Before the Senate Committee on Health, 
           Education, Labor and Pensions, Dated Feb. 7, 2002

       Good morning. My name is Betty Moss, and I am a former 
     Polaroid employee. I am accompanied today by Karl Farmer, 
     chairman of the Official Committee of Retirees for Polaroid 
     Corporation. I am also accompanied today by counsel for the 
     Official Committee of Retirees, Scott Cousins, of Greenberg 
     Traurig.
       I am 56 years old and I live in Smyrna, Georgia with my 
     husband, Lawrence. We have been married for 32 years and have 
     one son, Tom.
       I started working for Polaroid more than 35 years ago as a 
     file clerk, soon after finishing high school. My job was 
     eliminated last July, and I retired from Polaroid, finishing 
     my career as the Senior Operations Manager of Polaroid's 
     Atlanta Business Center.

[[Page E152]]

       As senior manager I was responsible for more than 100 
     employees as well as all administrative and operational 
     decisions associated with Polaroid's business operations in 
     Atlanta. My budget responsibilities totaled several million 
     dollars, but the ``people responsibilities'' were even more 
     important to me.
       I am quite familiar with Polaroid's management team and the 
     company's current state of financial distress. I know first 
     hand about the impact of the decisions made by the current 
     management team on the employees for whom they were 
     responsible. I've seen the impact on file clerks, on 
     engineers, on call center representatives, on people at every 
     level of the organization. These are people that I care 
     about, and they are now in pain.
       When I retired in July, Lawrence and I decided to see 
     America. We had always dreamed of traveling, so we packed a 
     camper and headed west for a three-month journey. Four weeks 
     later, our trip was abruptly halted in October, when I 
     realized my severance checks were not being deposited into my 
     checking account! We abandoned our trip and returned home, 
     knowing that something was terribly wrong.
       Soon after, we discovered that our medical insurance had 
     been canceled retroactively to the first of October. There 
     was no notice, no warning--we simply found ourselves without 
     medical coverage. I have Lupus and Lawrence is diabetic, so 
     you can imagine our horror! And, while you might think that 
     it was our being on the road that prevented notification 
     about the cancellation of all our retirement benefits, I 
     found that all Polaroid retirees--thousands of us--were in 
     exactly the same boat. No one was notified about the loss of 
     medical and other insurance coverage until days after the 
     company filed for bankruptcy. Weeks went by before the 
     company would even tell us whether we were covered by COBRA.
       As a Polaroid employee, I received health and life 
     insurance coverage and I contributed to a mandatory retiree 
     savings plan. When I retired, I expected to continue my 
     health and life insurance at Polaroid group rates and enjoy 
     the benefits of a healthy retirement savings plan through the 
     mandatory Polaroid ESOP. In 1997, four years before I 
     retired, my Polaroid ESOP shares were worth $60 each. Today, 
     those shares are worth less than a dime each.
       Back in 1988, we were told that the ESOP was being 
     established to protect Polaroid from being taken over by 
     other companies. It did help keep us an independent company, 
     and we rejoiced in that. In fact, we all proudly wore ID 
     badges that called us ``employee owners''. Today, most of us 
     wonder if it would have been better if we had been taken 
     over.
       Besides keeping the company independent, we were told that 
     the ESOP was also supposed to mean a healthy retirement for 
     employees. When we were in the first 10 years of the ESOP, 
     our former CEO used to promise ``95 in 95'' (in other words, 
     that our shares would be worth $95 a share in 1995). At $95 a 
     share, my retirement savings plan would have been worth about 
     $285,000. Now it is worth less than $300.
       Under the mandatory ESOP, all employees were forced to 
     participate by contributing 8 percent of their pay. We were 
     told this was necessary to help fund the $300 million 
     Polaroid had borrowed to fund the ESOP. None of us had a 
     choice. No one could choose not to invest in the ESOP, 
     regardless of whether our personal circumstances allowed us 
     to ``give up'' 8 percent of our pay. When the first ESOP was 
     paid off in 1997, Polaroid started a second ESOP (ESOP II), 
     which continued the employees' forced investment in Polaroid 
     stock.
       My 8 percent contribution purchased Polaroid common stock, 
     which I could not sell over that 13-year period, no matter 
     how well or how poorly the stock performed. The only 
     exception was the legal requirement that we be allowed to 
     diversify holdings the year after we reached age 55. We had 
     absolute faith the ESOP would be there to supplement our 
     pension fund and social security. We never envisioned that we 
     would be creditors of a bankrupt Polaroid. The ESOP was 
     promoted as a guaranteed retirement savings, which ``forced'' 
     employees to save money for retirement. Thousands of 
     employees relied on the ESOP stock to fund their retirement 
     savings.
       Unfortunately, by forcing us to invest heavily in Polaroid 
     stock for our retirement, the ESOP left us with almost no 
     savings. Prior to 1988, my retirement savings plan was 
     diversified and consistently showed an annual positive 
     return. Up until 1988, I had made regular contributions to 
     the 401(k) plan offered at Polaroid. After the ESOP was 
     forced upon us, I could no longer afford to contribute much 
     to the 401(k). At that time, I was only making about $35,000, 
     and 8 percent of that started going into Polaroid stock 
     through the ESOP.
       Average working people like me cannot raise their families, 
     pay mortgages, educate their children, and still afford heavy 
     contributions toward retirement. So, we had to rely on the 
     ESOP as a major part of our retirement savings plan. By 1997, 
     my ESOP holdings were worth about $160,000 when the Polaroid 
     share price was about $60. Although it wasn't as great as 
     ``95 in 95'', I still felt pretty good.
       Unfortunately, because of the forced ESOP contributions and 
     because I had to buy Polaroid stock, my retirement savings 
     were now heavily invested in one stock--Polaroid--which 
     wasn't worth much by the time I retired. What looked pretty 
     good in 1997 at $60 a share, is today worth about 8 cents a 
     share, as a result of the decisions of the current management 
     team.
       When I retired in July 2001, 1 took all of my ESOP shares 
     and converted them into stock certificates. But all of those 
     who were forced to invest so heavily in Polaroid stock cannot 
     even say today that they own the stock. We later learned that 
     State Street Bank & Trust, the trustee of the fund, started 
     liquidating Polaroid's ESOP shares in mid-November 2001, and 
     completely liquidated the fund by mid-December 2001. After 
     the liquidation was complete, Gary DiCamillo, Polaroid's 
     current CEO, sent out a letter on December 10, 2001 to all 
     employees notifying them that ``it was in the best interest 
     of participants in the ESOP fund to liquidate all shares.''
       I would like to emphasize that these ESOP participants--the 
     ``employee owners''--had absolutely no opportunity to approve 
     this sale--it was done completely without their knowledge. 
     Neal D. Goldman, the current Executive Vice President, 
     General Counsel and Chief Administrative Officer, sent a 
     December 18, 2001 letter to ESOP participants stating that an 
     approximate total of 7.2 million shares had been sold at 
     about 9 cents a share.
       If you do the math, that means shares of $687,000 in total 
     value to be shared among thousands of participants. This is a 
     stunning loss, since in 1997, the ESOP fund had an 
     approximate value of $480 million. What baffles us is this: 
     if the Trustee were truly acting in our best interest--to 
     protect our retirement savings--why did they wait to sell the 
     stock until it was virtually worthless? The stock has been on 
     a downhill slide since 1997. Why not sell when it reached $ 
     10 a share 2 years ago? After all, this was a retirement 
     savings plan! Why not when it reached $5?
       They could have sold it to protect our interests, even if 
     we could not. Why not at least sell when Polaroid filed for 
     bankruptcy and the stock was trading at about 70 cents a 
     share? Many of us cannot understand how the trustee of a 
     retirement savings plan acted ``in our best interest'' given 
     this set of circumstances. Not only that, the liquidation of 
     those shares means the ``employee owners'' have almost no 
     influence. We used to own almost 20 percent of the company. 
     Now we cannot even vote on the Polaroid bankruptcy and 
     related matters.
       I still own all of my ESOP shares of Polaroid stock, which 
     I will not sell, out of principle. But the recent demise of 
     Polaroid has left me with a loss of approximately $200,000 in 
     retirement savings. All of this is money that I would have 
     contributed all along to my 401 (k) had I not been forced to 
     participate in the ESOP. If I had been able to contribute 
     that money into a diversified 401K program, I am certain it 
     would now be worth more than $300.
       With the complete loss in value of my ESOP-funded 
     retirement savings, and loss of severance pay that I was 
     contractually entitled to receive after leaving Polaroid, 
     retirement looks quite different from what we had planned. 
     When we were young and first married, we went grocery 
     shopping with a calculator. We used the calculator to be sure 
     we only spent what we could afford, and we put back what we 
     could not afford.
       After 35 years of working at Polaroid, I now worry that I 
     will have dig out that old calculator again. My husband and I 
     never wanted to be wealthy--we just wanted to be secure in 
     retirement. Medical coverage alone now costs us around $7,500 
     a year. I will probably have to find a job later this year so 
     that I can get medical coverage through another employer. 
     However, with the job market being so tight, I'm not sure how 
     easy it will be for a ``retiree'' aged job seeker to find an 
     employer.
       As a former Polaroid manager, I continue to get countless 
     calls from employees who formerly reported to me. They want 
     to know how Polaroid could sell their ESOP shares without 
     their permission. They want to know how it was in their 
     ``best interest'' to sell the ESOP holdings at 9 cents per 
     share, when their average investment cost was around $25 per 
     share. I also get calls from other retirees like myself who 
     have been dumped by a corporation that we helped build, and 
     that once cared about us. Unfortunately, I can't answer these 
     very important questions. However, I do know that most long-
     term and former employees strongly believe Polaroid has a 
     fighting chance to survive this restructuring, to thrive 
     again, and to reinstate the value the shareholders have lost.
       Perhaps selling the ESOP shares was not ``in the best 
     interests of participants in the ESOP fund'' as Mr. DiCamillo 
     explained, but rather in the best interests of Mr. DiCamillo 
     and Polaroid's current management. These are the people who 
     are now working diligently to sell off the company instead of 
     working on a plan to restore Polaroid, which is truly ``in 
     the best interests'' of all current and former employees, as 
     well as shareholders and creditors.
       Thank you.





                          ____________________